Twenty five years ago, the U S government issued thirty year bonds with a coupon rate of about 8 Five years ago, the U S government sold ten year bonds with a coupon rate of about 5 Suppose that the current coupon rate on newly issued five year Treasury bonds is 2 5 For an investor seeking a low ri...

The YTM on each of these bonds would be quite similar The bonds paying ...

Twenty-five years ago, the U.S. government issued thirty-year bonds with a coupon rate of about 8%. Five

Question:

Twenty-five years ago, the U.S. government issued thirty-year bonds with a rate of about 8%. Five years ago, the U.S. government sold ten-year bonds with a rate of about 5%. Suppose that the current rate on newly issued five-year Treasury bonds is 2.5%. For an investor seeking a low-risk investment maturing in five years, do the bonds issued twenty-five years ago with a much higher rate provide a more attractive return than the new five-year bonds? What about the ten-year bonds issued five years ago?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...